CERTIFYING OFFICER LETTERS 1997

CERTIFYING OFFICER LETTERS FROM OTHER YEARS

TO: Participating Local Employers

FROM: Janice F. Nelson, Assistant Director for Health Benefits

SUBJECT: Local Group Rate Actions

At its December 19, 1997 public meeting, the State Health Benefits Commission established fiscal year rates for the Local Group of the State Health Benefits Program which become effective July 1, 1998. The Commission established rates for the Traditional Plan, NJ PLUS, and the State Prescription Drug Plan. HMO rates will be established in Commission meetings to be scheduled in January 1998. Complete rate charts will be provided to you shortly after the HMO rates are set.

Changes shown apply to all levels of coverage within each plan.

Performance of the SHBP has been relatively good in 1997 compared to similar type plans elsewhere. Survey data and industry trends reflect increases of from 9-11% for Traditional type plans, 5-7% increases for NJ PLUS type plans, and 12-15% increases for prescription plans.

If you have questions, contact Client Services at (609) 292-7524 or call the Employer Hotline at (609) 777-1082 and leave a message. A staff member will call you on the next business day.

December 1997

TO: Participating SHBP Employers

FROM: Janice F. Nelson, Assistant Director for Health Benefits

SUBJECT: Required Notices To SHBP Enrollees

Federal law mandates employers to provide notice of requirements of certain pieces of federal legislation to employees and their dependents upon their enrollment in the employers group health insurance. State Health Benefits Program (SHBP) participating employers have been providing initial notices for several years concerning the Consolidated Omnibus Budget Reconciliation Act (COBRA) program. To this must now be added an initial notice about the federal Health Insurance and Portability Accounting Act (HIPAA).

The attached documents provide everything you, as an employer, need to comply with the initial notice requirements of both COBRA and HIPAA. Enclosure one is a cover letter forwarding the required notices. You should modify this enclosure to reflect its being mailed from your location to an employee and dependents.

NOTE: To meet federal requirements, the letter must be addressed to the employee and Family, it must be mailed (first class mail is sufficient), and a copy must be retained to prove compliance. The second and third enclosures can be used "as is" as attachments to your modified enclosure one. Enclosure two updates and replaces the previous COBRA initial notification provided you. Enclosure three is a new HIPAA notice.

Federal law also requires that all enrollees - employees and dependents - in employer provided health plans be notified annually of HIPAA requirements and how the employer's plan compares with them. The notice at enclosure three will meet this requirement. You will have to mail a copy to all your SHBP enrolled employees to satisfy the requirement to properly notify dependents. Please complete your mailing prior to the annual open enrollment period.

Questions about this memorandum should be directed to the Employer Hotline at (609) 777-1082. Leave a message and a staff member will return your call within one business day.

TO: State Health Benefits Program Participating Employers

FROM: Janice F. Nelson, Assistant Director for Health Benefits

SUBJECT: Health Insurance Portability and Accountability Act (HIPAA) Update

The federal Health Insurance Portability and Accountability Act (HIPAA) of 1996 contained a number of provisions that affect the State Health Benefits Program (SHBP) and its participating employers. The first to affect the SHBP was the notification of coverage requirement to employees and family members who lose medical coverage. This requirement was effective in June 1997 and Yyou were sent information, along with a model certificate of group health plan coverage, in my HIPAA memoranda of June and August 1997.

In addition to the notification requirement mentioned above, HIPAA requires plans to implement the following provisions, or file for an exemption where applicable, by the beginning of their next plan year, which is January 1998 for the SHBP:

1. Limit restrictions of coverage for pre-existing conditions;

2. Offer a special enrollment period to individuals who meet certain conditions;

3. Eliminate discrimination against participants and beneficiaries based on health status;

4. Provide a minimum level of hospital coverage for newborns and mothers;

5. Provide parity in mental health benefits;. and

6. Provide annual notice to covered members of any plan provisions not in compliance with HIPAA requirements.

The SHBP offers fourteen medical plans to employees. These include twelve HMOs, all of which are insured plans;, athe Traditional Indemnity Plan, which is a self-insured indemnity plan; and NJ PLUS, a self-insured point-of-service plan. Self-insured, non-federal governmental plans, such as the Traditional Plan and NJ PLUS, may elect exemption from HIPAA requirements on a year to year basis, provided that an annual election form is filed with the federal Health Care Financing Since SHBP HMOs are all insured plans, they do not qualify for exemption and must comply with all HIPAA requirements.

Requirement #1 - Restrictions for pre-existing coverage

All SHBP plans exceed this HIPAA requirement since they have no pre-existing condition restrictions. No further action is required.

Requirement #2 - Special enrollment periods for employees

HIPAA permits an employee or employee's dependent who declined coverage because of other medical coverage to have an opportunity for special enrollment should the other coverage end. For example, an employee enrolled in the Traditional Plan may decline to enroll his wife and children because they have coverage under another plan. If the wife's coverage ends, the HIPAA requirement would permit the employee to enroll her and the children in the SHBP at that time. The SHBP already has a provision like this in effect in cases where both spouses work for employers participating in the SHBP.

The State Health Benefits Commission has voted not to file an exemption from this requirement for the Traditional Plan and NJ PLUS, therefore effective January 1, 1998, all SHBP plans will comply with this HIPAA requirement for employees. To use this special enrollment provision, the employee will be required to file a completed SHBP application within 30 days of the loss of the dependent's insurance coverage and attach an affidavit of proof of loss of insurance. Detailed instructions will be provided when we finish development of the affidavit.

Requirement #3 - No discrimination against participants based on health status

While the SHBP does not have any pre-existing coverage requirements, the law governing it does provide for the delay of coverage if an employee is not actively at work on the date coverage was to become effective. If the employee is absent for health reasons, then this restriction would be a form of discrimination, according to HIPAA, against an employee because of health status.

The State Health Benefits Commission has voted not to file an exemption from this requirement for the Traditional Plan and NJ PLUS. Therefore, effective January 1, 1998, all SHBP plans will comply with this HIPAA requirement. Note: the "actively at work" requirement is only being waived for employees not at work due to illness. It is still in effect for those employees not at work because of other reasons, such as job abandonment.

Requirement #4 - Minimum hospital stay coverage for newborns and mothers

All SHBP plans currently meet this HIPAA requirement since they already provide the hospital stay lengths included in the federal law. No further action is required.

Requirement #5 - Parity in mental health benefits

The law governing the SHBP limits major medical coverage for mental health benefits under the Traditional Plan to a lifetime limit of $20,000 with an annual limitation of $10,000., This limitation is subject to a restoration clause of $2,000 per year ( with the total restoration may not to exceed $20,000. The NJ PLUS plan design limits coverage for mental health benefits to a lifetime limit of $50,000 with an annual limitation of $15,000. The NJ PLUS restoration clause is also $2,000 per year. In contrast to these mental health benefits, the general lifetime limit for major medical benefits in the Traditional Plan and out-of-network benefits in NJ PLUS is $1 million, with restoration of up to $2,000 per annum.

The State Health Benefits Commission has filed for exemption from this requirement filed with the federal Health Care Financing Administration for calendar year 1998. Therefore, for the present time, the maximum annual and lifetime dollar limits for mental health benefits in the Traditional Plan and NJ PLUS will not change.

SHBP HMOs, which do not have dollar limits for coverage for mental health services, do restrict the number of covered visits per year (generally 30 per year). This type of restriction is permitted under HIPAA., tTherefore, all of the SHBP HMOs are already in compliance with HIPAA.

Participant Notification (Requirement #6)

SHBP participating employers must provide a copy of the enclosed notice notice to any new employee newly enrolling in the SHBP. It complies with the HIPAA requirement to notify plan participants of any deviation from HIPAA provisions.

The Division of Pensions and Benefits will notify employees and their dependents of the above actions through our SHBP newsletters and open enrollment publications. These will be sent to participating employers for distribution. The Division will also notify enrolled retirees and their dependents about HIPAA and the SHBP's exemption from the mental health parity requirement.

The State Health Benefits Commission has requested that Buck Consultants provide analysis and recommendations concerning various alternatives in plan design of mental health benefits. Since the mental health limitations currently in effect are detailed in the law governing the SHBP, a change in plan design may require legislative action.

If you have questions, contact Client Services at (609) 292-7524 or call the Employer Hotline at (609) 777-1082 and leave a message. A staff member will return your call on the next business day.

ENCLOSURE:

Notice to Participants about Federal Health Insurance Requirements

The Health Insurance Portability and Accountability Act (HIPAA), the Mental Health Parity Act, and the Newborns' and Mothers' Health Protection Act, federal laws enacted in 1996, contain a number of provisions that affect the State Health Benefits Program (SHBP). HIPAA requires group health plans to implement the following provisions that are contained in the three federal laws by the beginning of their next plan year, which is January 1, 1998 for the SHBP:

#1 - Limit the use of pre-existing condition restrictions to a maximum of twelve months;

#2 - Offer a special enrollment period to employees and dependents who do not enroll in the plan when initially eligible because they have other coverage, and who subsequently lose that coverage;

#3 - Eliminate discrimination against participants and beneficiaries based on health status;

#4 - Provide a minimum level of hospital coverage for newborns and mothers, generally 48 hours for a vaginal delivery and 96 hours for a cesarean delivery; and

#5 - Provide parity in mental health benefits., that is, any dollar limitations applied to mental health treatment cannot be lower than those on medical and surgical benefits.

The SHBP offers 14 medical plans to employees. These include 12 HMOs, all of which are insured plans;, the Traditional Plan, which is a self-insured indemnity plan; and NJ PLUS, a self-insured point-of-service plan. Self-insured, non-federal governmental plans, such as the Traditional Plan and NJ PLUS, may elect exemption from the above HIPAA requirements on a year to year basis. Insured plans, like all of the SHBP HMOs, do not qualify for exemption and must comply with all HIPAA requirements.

Effective January 1, 1998, all SHBP plans meet or exceed HIPAA requirements #1 through #4 above. SHBP HMOs also comply with requirement #5 above. The Traditional Plan and NJ PLUS will not be HIPAA compliant on mental health parity (requirement #5) in 1998 because the State Health Benefits Commission has filed an exemption from this requirement. The mental health limits for the Traditional Plan and NJ PLUS that are described in the New Jersey State Health Benefits Program Medical Plans Information Handbook will remain in effect throughout 1998.

The SHBP will conduct a study in 1998 to review the design of mental health benefits in the Traditional Plan and NJ PLUS.

TO: Participating State Health Benefits Program Employers

FROM: William H. Kale, Assistant Director for Client Services

SUBJECT: Requests From Medicare For Claims Reimbursement

Many employers have asked us what to do about notices from XACT Medicare Services (and other Medicare carriers) demanding payment for claims paid for individuals who may have been covered by the employer's group plan. Federal law requires Medicare carriers to seek out and bill an employer's plan for claims paid by Medicare for individuals who have coverage because of someone's active employment.

If you are contacted by a Medicare carrier, you should respond directly to the Medicare carrier. Indicate the name and address of the insurance carrier which handled the claims for the named individual during the period in question. If more than one carrier was involved, you must identify all carriers which may be responsible for paying the claims.

If the individual listed is NO LONGER covered under your active employee group plan, you must tell the Medicare carrier the following:

• if the individual was ever covered under your employer group plan as an active employee or as the spouse of an active employee;

• the date on which coverage ended;

• the date on which eligibility for coverage ended;

• the reason eligibility ended; and

• the name and address of the insurance company (or companies) processing claims for the period where coverage existed.

Example: You receive a notice involving 1996 claims for a former employee who retired in 1995. Your response should tell the Medicare carrier that Employee X, SSN ### ## ####, was enrolled under your employer group plan while employed at your location (give employer name), but that coverage ended on February 1, 1995 because Employee X retired on January 1, 1995. Since no coverage existed from your location existed during the period in question (1996), you do not have to provide any insurance carrier information.

Once XACT Medicare Services (or another Medicare carrier) bills an employer for reimbursement, ONLY the employer can resolve the issue. Forwarding the package to the State Health Benefits Program offices in the Division of Pensions and Benefits does not solve the problem. Since the carrier has information from the employer indicating that coverage exists, it will accept certification that coverage under an active employee group does not exist ONLY from the employer. For most of these cases, the employer will continue to be billed until it explains the situation to the Medicare carrier.

You may be able to reduce the likelihood of receiving billing notices from a Medicare claims carrier. The first step in the Medicare billing process is the IRS/SSA/HFCA (MEDICARE) DATA MATCH. This program, run by a contractor for the federal government, takes tax data (usually from two or three years ago) and links it to an employer. The Data Match Contractor then contacts the employer and asks about group health insurance coverage. This is normally done through the IRS/SSA/ HCFA DATA MATCH SURVEY. If coverage as an active employee exists, the employer must tell Medicare where to send the Medicare reimbursement claims for payment. If you get a data match survey, three keys to avoiding billings by Medicare are to indicate the following information on the survey form:

• the date of termination of active coverage with your employer group, if appropriate;

• If multiple active coverage's exist, which active employee coverage is primary (i.e., if the spouse of one of your employees has other employer group coverage); and

• the name and address of the insurance carrier where claims should be sent. The State Health Benefits Bureau does not handle any claims and should not be listed on the Data Match Survey. The addresses of SHBP insurance carriers to which Medicare claims should be sent are listed on the enclosed form.

NOTE: Medicare is only interested in coverage under an employer group plan because of active employment. On-going retiree group coverage under the SHBP should not be mentioned because Medicare is primary to that retired group coverage.

Following the steps listed above should assist you in avoiding Medicare billings or, if you receive one, quickly resolving the situation satisfactorily. If you have questions about this subject, please contact one of our Client Services counselors at (609) 292-7524 or you may call the SHBP Employer Hotline at (609) 777-1082 and leave a message. One of our staff members will contact you within two business days.

TRADITIONAL PLAN, NJ PLUS & #10 HMO BLUE
BCBSNJ
MSP Coordinator
3 Penn Plaza East PP 02C
Newark, NJ 07105-2200

#13 HIP HEALTH PLAN OF NEW JERSEY
1 HIP Plaza
North Brunswick, NJ 08902

#17 PRUDENTIAL HEALTHCARE HMO
200 Wood Ave. South
PO Box 303
Iselin, NJ 08830

#18 AETNA HEALTHCARE
3541 Winchester Rd
Allentown PA 11895
(use for claims prior to merger with #19 US Healthcare effective 7-1-97)

AETNA US HEALTHCARE
1425 Union Meeting Rd
Blue Bell PA 19422
(use for all claims since merger with #18 Aetna and all claims for #19 US Healthcare prior to merger)

#20 CIGNA HEALTH CARE/COMED HMO
Rockaway 80 Corporate Center
100 Enterprise Drive
Suite 610
Rockaway, NJ 07866

#28 OXFORD HEALTH PLANS
521 Fifth Ave.
15th Floor
New York, NY 10175

#29 NYLCARE
NYLCARE Claims
75-20 Astoria Blvd
Jackson Heights, NY 11770

#33 AMERIHEALTH HMO PLAN
800 Midatlantic Dr.
Suite 333
Mt. Laurel, NJ 085401

#34 FIRST OPTION HEALTH PLAN
The Galleria
2 Bridge Ave. Bldg. 6
Red Bank, NJ 07701

#35 QUALMED PLANS FOR HEALTH
3550 Market St.
Philadelphia, Pa 19104

#36 UNIV. HEALTH PLANS, INC.
60 Park Place
15th Floor
Newark, NJ 07102

#37 PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY
1009 Lenox Drive Bldg. 4
Lawrenceville, NJ 08648

TO: Certifying Officers, Public Employees' Retirement System, Teachers' Pension and Annuity Fund

FROM: Margaret M. McMahon, Director

SUBJECT: Reduced Pension Contributions

Employee pension contributions for members of the Public Employees' Retirement System (PERS) and the Teachers' Pension and Annuity Fund (TPAF) will be reduced for all of calendar year 1998 from 5% to 4.5% of pensionable salary. Please take appropriate action to implement this change.

This change results from enactment of the Pension Security Legislation (Chapters 113, 114, & 115 of P.L. 1997), signed by Governor Whitman on June 5, 1997. These laws also resulted in $2.75 billion being deposited in the various State administered pension systems, which fully fund these systems. Additionally, local employer pension contributions to PERS normally due April 1, 1998, will not be required (except for early retirement incentives from previous years) because sufficient excess assets are already in the system to offset those payments.

The minimum repayment schedule for pension loans and the minimum deduction for service credit purchases, which are based on the normal pension contribution rate, will not change from the current levels. This is because the reduction of employee contributions is not a permanent reduction of the normal contribution rate; it is a temporary reduction.

Employer representatives responsible for completing the Certification of Service and Final Salary for retiring members must remember to take the reduced contribution rate into account when projecting deductions that will be made from base salary after January 1, 1998.

If there are sufficient excess assets available in the pension systems, the reduced contribution rate for employees could be extended through 1999. You will be notified if this is the case in September of next year.

For more information about the pension security legislation, visit the Division of Pensions and Benefits Home page on the world wide web. Our Internet address (URL) is shown below.

TO: Participating SHBP Employers State Benefits Administrators

FROM: Janice F. Nelson, Assistant Director for Health Benefits

SUBJECT: Traditional Plan Identification Card Reissue

The State Health Benefits Program (SHBP) will be reissuing identification cards for all participants of the Traditional Plan during the end of September and early October. Cards for active group members will be sent in bulk to employers for distribution directly to participants. Cards for retirees and COBRA members will be mailed to home addresses by Blue Cross Blue Shield of New Jersey.

The new cards are made of flexible material which provides more space on the face of the card for information that will facilitate claims filing. The switch to the new material also reduces the cost of both producing and mailing cards to members. Members can continue to use their old cards until they receive the new cards.

Cards for NJ PLUS members will also be converted to the flexible materials. However, these cards will not be reissued in bulk. As new members are enrolled and existing members change coverage, replace lost cards, or request additional cards, the new flexible cards will be supplied.

We appreciate your assistance in providing these new Traditional Plan cards to your employees. Questions about this memorandum should be directed to the Employer Hotline at (609) 777-1082. Leave a message and a staff member will return your call within one business day. If you do not receive the new Traditional Plan identification cards for your employees by October 3, 1997, contact BCBSNJ at 1-800-414-SHBP (7427).

TO: Participating SHBP Employers

FROM: Janice F. Nelson, Assistant Director for Health Benefits

SUBJECT: Health Insurance Portability and Accountability Act Update

In June, we provided you information on how the federal Health Insurance Portability and Accountability Act (HIPAA) affects participating employers in the State Health Benefits Program (SHBP). We outlined the various notifications employers must send to employees and family members who lose medical coverage.

Several employers have contacted us and indicated a difficulty in supplying the names of dependents to be included on the Certificate of Coverage. They had the names on file, but had to go to manual personnel files to obtain them. Other employers did not have the names on file and were having to call the Division of Pensions and Benefits for the names of the covered dependents.

HIPAA regulations include a transition rule, in effect until June 30, 1998, that may offer some assistance to employers in meeting the Certificate requirement. The transition rule permits the employer to list the employee and level of coverage (e.g., employee and spouse, family) instead of listing the dependents if the employer does not have reasonable access to dependent names. However, if a Certificate for a dependent is requested, then the employer must make reasonable efforts to obtain the name of the covered dependent. Again, this transition rule is only in effect until June 30, 1998. After that, employers must list each dependent on the Certificate. By that date, our new State Health Information Processing System may have features in place to assist employers in meeting this HIPAA reporting requirement.

We are attaching a revised copy of the Certificate of Coverage that corrects a typographical error in item 8. Although the instructions supporting the form had correct information on item 8, the typographical error was confusing to some individuals.

Questions about this memorandum should be directed to the Employer Hotline at (609) 777-1082. Leave a message and a staff member will return your call within one business day.

FROM: Margaret M. McMahon, Director

SUBJECT: Chapter 137, P.L. 1997

Chapter 137, Public Law of 1997 was approved and signed by Governor Whitman on June 27, 1997 and became effective immediately. This law extends membership in the Police and Firemen's Retirement System (PFRS) for certain members beyond July 1, 1997 but in no case beyond January 1, 1998.

This law permits any member of PFRS to continue membership in the PFRS after attaining age 65 provided the member had not attained 25 years of service by June 27, 1997. Membership in PFRS may continue up until the time one of the following three events occurs:

Chapter 137 also contains a provision that only applies to members of PFRS who are classified as policemen as defined by the retirement system and are employed by an agency other than the State of New Jersey. The provision allows the employer (other than the state) to extend the membership of a policeman in PFRS who would have been forced to retire on July 1, 1997 to January 1, 1998. To qualify under this provision the member must:

For any employer who adopts a resolution extending the membership for policemen as described above, any civil service employment list used to fill vacant policemen positions that either existed on June 27, 1997 or becomes effective on or before December 31, 1997, will not expire or be canceled before February 1, 1998.

If you have any questions concerning this law, please call Client Services at (609) 292-7524.

Dear New Jersey State College/Monthly Payroll Agency:

United Concordia Dental Provider Organization (DPO) and CIGNA DPO will no longer be offered through the New Jersey State Health Benefits Program (SHBP) beginning with the 1997 plan year. United Concordia and CIGNA DPO enrollees should have completed applications to transfer to another dental plan offered through the SHBP during the recent 0pen Enrollment period.

For your information, enclosed are copies of letters to CIGNA and United Concordia enrollees. The letters explain the extension of benefits currently in progress which are as follows: If employees or dependents covered by CIGNA DPO or United Concordia DPO were already in treatment for a crown or restoration (tooth prepared), appliance or modification of an appliance (impression taken), root canal therapy (pulp chamber opened) or orthodontia treatment, those services will be continued to conclusion through their CIGNA or United Concordia dental provider.

The SHBP will allow former enrollees of either of these two plans, who did not transfer to another plan during the past Open Enrollment period, but wish to have dental coverage, the opportunity to enroll in a new dental plan. They may enroll in a new plan through July 3, 1997. The effective date of enrollment in the new plan should be the first of the next available month. If forms are too late for a July 1 effective date, they should be made effective August 1 and there will be a break in coverage. If enrollment forms are not submitted, employees should be terminated July 1, 1997.

If you have any questions concerning premium or dental coverage for your employees please contact the Division of Pension and Benefits.

Sincerely,
Leonard Leto
Manager, Policy and Planning

June 9, 1997

Dear New Jersey State Payroll/Benefit Administrators:

The United Concordia Dental Provider Organization (DPO) and CIGNA DPO will no longer be offered through the New Jersey State Health Benefits Program (SHBP) beginning with the 1997 plan year.

For State Bi-weekly employees paid through Centralized Payroll, the effective date of enrollment into their new dental plan will occur July 1. This represents a change from the July 5th effective date provided in communication materials distributed during the recent Open Enrollment period. If Bi-weekly employees also added dependents to their dental plan during the Open Enrollment period, coverage for those added dependents will be effective July 5th.

Former CIGNA and United Concordia enrollees who did not transfer during the past Open Enrollment period, but wish to have dental coverage and want to enroll in another plan offered by the SHBP, may be permitted to do so through July 3, 1997. Forms submitted through June 13, 1997 may be made effective July 1, 1997. Forms submitted after July 13th will become effective August 2, 1997 and dental coverage will not be provided from July 1, 1997 through August 1,1997.

Letters have been sent to CIGNA and United Concordia enrollees providing information on termination dates and the extension of benefits in progress. Additionally, those enrollees, who did not transfer to another plan during the recent open enrollment period, were advised of a special opportunity to enroll in a new SHBP dental plan.

If you have any questions concerning the dental coverage of former enrollees of United Concordia or CIGNA, please contact the Division of Pensions and Benefits.

Sincerely,
Leonard Leto
Manager, Policy and Planning

Dear CIGNA Dental Plan Organization Enrollee:

You recently received a letter providing you with information concerning the termination of your dental benefits through CIGNA.

Our records indicate that you did not complete an application to transfer to another dental plan offered through the State Health Benefits Program (SHBP) during the recent open-enrollment period and therefore your CIGNA Dental Plan Organization (DPO) coverage will terminate June 30,1997, and you will no longer have dental coverage through the SHBP.

If you wish to have dental coverage and want to enroll in another plan offered by the SHBP, you may do so through July 3, 1997. Your enrollment into your new dental plan will become effective August 2, 1997. You will not have SHBP dental coverage from July 1, 1997 through August 1,1997.

To take advantage of this special enrollment opportunity, contact your payroll/benefits administrator and complete a dental enrollment application prior to July 3, 1997.

Sincerely,
Leonard Leto
Manager, Policy and Planning

Dear CIGNA Dental Plan Organization Enrollee:

Effective July 1, 1997, the CIGNA Dental Plan Organization (DPO) will no longer participate in the State Health Benefits Program (SHBP).

As a CIGNA DPO enrollee, you should have completed an application to transfer to another dental plan offered through the SHBP during the recent open-enrollment period. If you transferred to another dental plan during the open enrollment, you will be enrolled in your new dental plan on July 1,1997. If you did not complete and file a new dental application, your CIGNA DPO coverage will terminate June 30, 1997 and you will no longer have dental coverage through the SHBP.

NOTE: for State Bi-weekly employees paid through Centralized Payroll, the effective date of enrollment into your new dental plan will occur within a payroll period (July 1) and represents a change from the July 5th effective date provided in communication materials distributed during the recent open enrollment. If you also added dependents to your dental plan during the open enrollment, their coverage will be effective July 5th.

Other than for emergencies, we recommend that you refrain from beginning any new course of treatment (especially long treatment services such as orthodontia) that cannot be completed by June 30, 1997 with your CIGNA dental professional. If you or your covered dependent(s) have begun treatment for a crown or restoration (tooth prepared), appliance or modification of an appliance (impression taken), root canal therapy (pulp chamber opened) or orthodontia treatment, services will be continued to conclusion through your current CIGNA dental professional, regardless of whether you transfer to another dental plan offered through the SHBP, or you terminate your dental coverage.

If you have any problem receiving treatment to complete the above mentioned services, please notify your employer and have them contact the Division of Pensions and Benefits.

Sincerely,
Leonard Leto
Manager, Policy and Planning

TO: Participating SHBP Employers

FROM: Janice F. Nelson, Assistant Director for Health Benefits

SUBJECT: Health Insurance Portability and Accountability Act (HIPAA)

The federal Health Insurance Portability and Accountability Act (HIPAA) that was signed into law last year included provisions that will affect participating employers in the State Health Benefits Program (SHBP). These new provisions restrict a group health plan's ability to set pre-existing condition limitations. Since the SHBP has no pre-existing condition provisions, the impact of HIPAA on participating employers primarily concerns notification requirements to employees and family members who lose medical coverage. The new requirements which must be fulfilled by SHBP participating employers are listed immediately below. Each is described in detail later in this memorandum.

• Employees and family members of employees losing medical plan coverage after June 1, 1997 must be automatically provided a Certificate of Coverage.

• Employees and family members of employees who lost medical plan coverage between October 1, 1996 and May 31, 1997 must be provided a Special Notice of Coverage or a Certificate of Coverage before June 1, 1997.

• Upon request, employees and family members of employees who lost medical plan coverage between July 1, 1996 and October 1, 1996 must be provided a Certificate of Coverage.

Certificate of Coverage Required After June 1, 1997

Employees and family members who lose medical plan coverage after June 1, 1997, regardless of the reason for the loss, must be provided a Certificate of Coverage which shows the length of time they have been continuously covered under the plan. The Certificate of Coverage must be provided within fourteen days of the loss of coverage or notification to the employer of the loss of coverage, whichever is later. This time period for providing the Certificate of Coverage is identical to that required for COBRA Notification. If COBRA Notication is required by law, the Certificate of Coverage should be mailed with the COBRA package. If COBRA Notification is not required, the Certificate must be mailed independently. A sample Certificate of Coverage and instructions for completing it are enclosed.

You should maintain a copy of any Certificate of Coverage you send out to employees and or their family members as proof of meeting the requirement and for future use. Anyone eligible for a Certificate, or their designated agent, may request another copy of the Certificate at any time within 24 months of its issuance. Having a copy on file will save you time and facilitate this reissuance.

If an employee or family member losing SHBP medical plan coverage continues that coverage under COBRA, another Certificate of Coverage will be issued by the SHBP COBRA Administrator upon termination of the COBRA coverage.

HIPAA contains provisions that allow group health providers receiving a Certificate of Coverage to follow up with the issuer to obtain details regarding plan coverage. If a provider contacts you for detailed coverage information, send them a copy of Fact Sheet #36 Available Health Plans in the State Health Benefits Program, and refer them to the plan phone numbers contained in the Fact Sheet for further information.

Special Notice of Coverage or Certificate of Coverage Required before June 1, 1997

Employees and their family members who lost medical plan coverage between October 1, 1996 and May 31, 1997 must be provided a Special Notice of Coverage or a Certificate of Coverage before June 1, 1997. The Special Notice of Coverage (a sample is enclosed) informs the member of their right to a Certificate of Coverage and how to obtain one. If you wish, you may opt to send only the Certificate of Coverage and skip the Special Notice of Coverage. If you have not already met this requirement, you should do so immediately to demonstrate a good faith effort to comply with HIPAA provisions.

Certificate of Coverage for Members Who Departed Before October 1, 1996

Employees and their family members who lost medical plan coverage between June 1, 1996 and October 1, 1996 must be provided a Certificate of Coverage upon request. You have no requirement, however, to inform these individuals of this right under HIPAA.

Other HIPAA Provisions

HIPAA established other requirements regarding benefits coverage, employee and dependant eligibility, and plan information that may have to be provided to enrolled members. These requirements will have an impact on the SHBP as a whole, but are not of an immediate concern to employers like the notification requirements discussed above. As we develop our policies to implement special provisions of HIPAA, we will make appropriate notifications to employers and employees alike.

Questions about this memorandum should be directed to the Employer Hotline at (609) 777-1082. Leave a message and a staff member will return your call within one business day.

TO: Participating Local Employers of the State Health Benefits Program

FROM: Margaret M. McMahon, Director

SUBJECT: State Health Benefits Program Premium Holiday Months

We are pleased to announce that the months of October and December will be Premium Holiday months for the Traditional Plan and NJ PLUS.

Two Premium Holidays

Local employers who were participating in the State Health Benefits Program (SHBP) on January 1, 1997 can take advantage of both Premium Holidays. Premium Holidays include payments for active employees, retirees, and COBRA participants enrolled in the Traditional Plan and NJ PLUS. Premium payment for these participants' coverage will not be required for bills due October 10, 1997 and December 10, 1997.

One Premium Holiday

Employers who join the SHBP after January 1, 1997 may take advantage of the second premium holiday. A new employer must continue to participate in the SHBP for an additional twelve months from the date of the Holiday or the premium saved during the Holiday will be payable.

Premium Delay

The SHBP routinely offers employers the ability to delay premium payments for one or two months. Employers who have taken advantage of premium delay will also enjoy the Premium Holidays for the bills that would be payable on October 10, 1997 and December 10, 1997.

Retirees and COBRA Participants

SHBP local group retirees and COBRA participants who pay for their own Traditional Plan or NJ PLUS coverage will not be charged for that coverage during the Premium Holiday months of October and December 1997. Retirees who have the cost deducted from their pension checks will have a message on the check explaining the Premium Holiday. Those retirees and COBRA participants who are sent a bill for coverage will receive a bill which will indicate no premium due with an explanation of the premium holiday.

The State Health Benefits Program and the Division of Pensions and Benefits are committed to providing employers and members with high quality programs in a cost effective manner. The Premium Holidays extended to participants by the State Health Benefits Program is evidence of that commitment.

If you have any questions about the SHBP employer bills, please call our Employer Hotline at (609) 777-1082 and leave a message. A staff member will return your call on the next work day.

TO: Certifying Officers, Public Employees' Retirement System (PERS)

FROM: Margaret M. McMahon, Director

SUBJECT: Chapter 23, P.L. 1997

Governor Whitman recently signed into law Chapter 23, P.L. 1997. This law makes retired PERS members who return to work after February 27, 1997 in a PERS eligible position, ineligible for membership in PERS provided the annual salary does not exceed $10,000.

Chapter 23 only applies to retirees of PERS who return to employment in an otherwise eligible PERS position. It does not alter the membership requirements of the PERS for any other individuals who are employed in a PERS eligible position.

A PERS retiree may be hired in a PERS eligible position without having to resume active membership provided the annual salary does not exceed $10,000. The retiree must be off payroll for at least 30 consecutive days after termination of employment and must be retired from PERS prior to beginning employment in the position.

If an employee is retired from PERS and returns to work in two or more PERS eligible positions with the same employer, the salaries from all eligible positions are combined when considering the $10,000 limit. However, if a retiree returns to work in two or more PERS eligible positions with more than one employer, the salaries earned at each employer are considered separately when considering the $10,000 limit. For example, an employee's annual salary at employer A is $9,000 and the annual salary at employer B is $7,500, the employee would not be eligible for PERS membership at employer A or employer B.

This law does not apply to PERS members who previously retired and reenrolled prior to February 27, 1997. If a member whose base salary does not exceed $10,000 now wishes to leave the retirement system, the member must terminate employment, retire and remain off the payroll for at least 30 days. The member would then be permitted to return to PERS employment and not jeopardize his/her retirement benefit provided the annual salary did not exceed $10,000.

Please notify your employees of the change in the membership eligibility for PERS retirees under the provisions of Chapter 23.

Should you have any questions, please contact Client Services at (609) 292-7524.

April 15, 1997

TO: State College/University Alternate Benefits Program (ABP) Participants Enrolled in the State Health Benefits Program (SHBP)

FROM: Margaret M. McMahon, Director

SUBJECT: State-Paid Health Benefits in Retirement

In January, State employees were given a copy of a letter, subject as above, that described the impact that Chapter 8, P.L. 1996 would have on their State Health Benefits Program (SHBP) coverage in retirement. Although the letter was pertinent to all State employees in the SHBP, there were portions of it, specifically those dealing with the purchase of pension service and the formal certification of 25 years of service, that pertained only to members of the Public Employees' Retirement System (PERS) and the Police and Firemen's Retirement System (PFRS), and did not pertain to Alternate Benefit Program (ABP) participants. This letter is specifically directed to ABP participants to clear up any misconceptions created by the earlier letter.

Prior to the enactment of Chapter 8, P.L. 1996, State law provided State-paid health benefits, up to the cost of the Traditional Plan, for state employees enrolled in the SHBP who retired with 25 years of service in a State administered retirement system or who retired on a disability retirement regardless of the length of service. That law was changed by Chapter 8, P.L. 1996, which allowed negotiation between the State and unions on payment of premiums for active employees and retirees. Members of the SHBP already retired were not affected by this change in law. The effect of Chapter 8 on State employees enrolled in the ABP who are eligible for SHBP coverage is outlined below.

To determine service time for SHBP purposes, time credited to your ABP account while working in an ABP covered position is used. Additionally, if you transferred pension contributions from another New Jersey State administered public retirement system to the ABP, your ABP account has been credited with the service attributed to the transferred contributions. The ABP is a defined contribution plan, that is, it is a plan whose retirement benefit is solely based on contributions and investment performance. Because of this, there are no provisions in the current laws governing the ABP for the purchase of service credit for military, federal, or other public employment.

Employees with at least 25 years of service credit in the ABP system on June 30, 1997: Chapter 8, P.L. 1996 does not affect your retired group benefits. The State will pay for the cost of whatever SHBP plan you choose for you and your covered dependents in retirement, whenever you retire, up to the cost of the Traditional Plan. Those terminating employment and taking a deferred retirement annuity are not normally eligible for SHBP coverage in retirement.

Employees qualifying for an ABP long term disability before July 1, 1997: Chapter 8, P.L. 1996 does not affect your retired group benefits. The State will pay for the cost of whatever SHBP plan you choose for you and your covered dependents, up to the cost of the Traditional Plan.

Employees who attain 25 years of service credit in the ABP system on or after July 1, 1997: The State will pay for the cost of whatever SHBP plan you choose for you and your covered dependents in retirement, up to the cost of the Traditional Plan, in accordance with the union contract which applies to you at the time you reach 25 years of service, regardless of the date you retire. If you are not in a title eligible for union representation, you are considered non-aligned and rules adopted by the State Health Benefits Commission will determine the State's and, if applicable, your payment of SHBP plan costs in retirement. Current union contracts and Commission rules call for affected retirees to pay a portion of the cost for the Traditional Plan only with no cost for managed care plans (NJ PLUS or an HMO). This approach is similar to premium sharing arrangements now in place for active employees. Naturally, these arrangements could change in future union contracts when they are renegotiated.

Employees qualifying for an ABP long term disability on or after July 1, 1997: The State will pay for the cost of whatever SHBP plan you choose for you and your covered dependents, up to the cost of the Traditional Plan, in accordance with the union contract or Commission rules which apply to you at the time you qualify for the long term disability. Current union contracts and Commission rules call for affected retirees to pay a portion of the cost for the Traditional Plan only with no cost for managed care plans (NJ PLUS or an HMO). This approach is similar to premium sharing arrangements now in place for active employees. Naturally, these arrangements could change in future union contracts when they are renegotiated.

Given the fact that ABP membership records are not automated and that ABP members cannot purchase other service, the Division of Pensions and Benefits will certify member service when the member nears retirement. At that time, the Division will determine when the member reached 25 years of service and identify the contract or Commission rules in effect at that time. You can request this certification from the Division through your employer when you initiate your retirement paperwork.

I hope this letter clears up any confusion you may have experienced from the initial letter. If you have any further questions, please see your employer's benefits administrator or call Client Services at (609) 292-7524.

March 28, 1997

TO: Certifying Officers, Police and Firemen's Retirement System

FROM: Margaret M. McMahon, Director

SUBJECT: Maximum Hiring and Retirement Ages

This memorandum announces policies regarding the reinstatement of mandatory retirement and maximum enrollment age restrictions for the Police and Firemen's Retirement System (PFRS). Background information on this subject is at the end of this memorandum.

• Mandatory Retirement: After June 30, 1997, PFRS members must retire no later than the first of the month following their 65th birthday. Members who are or will be age 65 or older by June 30, 1997, must retire no later than July 1, 1997.
  
  
• Maximum Enrollment Age: After February 25, 1997, individuals qualified to enroll in the PFRS in all other respects must also meet the maximum age restriction, that is, appointed on or before his/her 35th birthday, to enroll in PFRS.

Individuals hired in a PFRS eligible title at a Civil Service location on or after February 25, 1997, must have been age 35 or under as of the closing date of the examination for that title to establish membership in PFRS. Note: Individuals meeting this age requirement can be hired at any time from the Civil Service list while it is still active and be enrolled in PFRS.

Individuals hired in a PFRS eligible title at a Non-Civil Service location on or after February 25, 1997, must have been age 35 or under on the date of hire to establish membership in PFRS.

Individuals employed by any State or County location who did not meet the maximum age requirement described above must establish membership in the Public Employees' Retirement System (PERS) one year after being provisionally employed in the title or immediately after being permanently appointed in the title.

Individuals hired by any municipality in an eligible PFRS title on or after February 25, 1997, who were over age 35 on the date of hire, cannot establish membership in any State-administered retirement system.

Note: If the hiring process was initiated for an individual prior to February 25, 1997, and the individual is hired prior to May 1, 1997, you may forward an application for enrollment to the Enrollment Bureau of the Division with a description of the factual matters of the situation. The Division, in conjunction with the Office of the Attorney General, will review and make a determination as to eligibility for PFRS enrollment.

( Members who qualified for enrollment in the PFRS while the age 35 restriction was not in force will be allowed to enroll and/or retain membership in the system on the same basis as any other member.

New Jersey statutes (N.J.S.A. 40A:14-12, N.J.S.A. 40A:14-127, N.J.S.A. 53:1-9 and N.J.S.A. 43:16A-5) and New Jersey Administrative Code (N.J.A.C. 17:4-2.5 and N.J.A.C. 17:4-6.14) establish mandatory retirement and maximum hiring ages for the PFRS. These provisions were superseded in 1993 by federal legislation, the Age Discrimination in Employment Act (ADEA), so that the state statute and administrative code could not be enforced.

In September 1996, the federal government eliminated those ADEA restrictions that applied to the PFRS governing statutes. The State Attorney General reviewed the federal action and, on February 25, 1997, published Formal Opinion No. 1 which stated that the PFRS age restrictions must be enforced again. After reviewing that opinion, the PFRS Board of Trustees decided on March 3, 1997 to permit the Division to process PFRS enrollments without regard to age until April 30, 1997. On March 18, 1997 the Office of the Attorney General clarified the formal opinion saying that, as a matter of law, the age 35 hiring restriction became effective on the date the formal opinion was issued, February 25, 1997, which changed the Board of Trustees' directive.

Individuals who contacted the Division between the Board's decision on March 3 and the Attorney General's clarification on March 18 were told that hiring over age 35 could be done through April 30, 1997. We now know that this was not the correct interpretation. However, as the note at the top of this page indicates, hiring situations that occur before May 1, 1997 will be reviewed on a case by case basis. We apologize for misleading anyone who may have contacted our office.

Direct general questions on PFRS membership to Client Services at (609) 292-7524. Use the Employer Hotline at (609) 777-1082 for specific, detailed questions on PFRS membership. Leave your name, a detailed message, and your telephone number and a staff member will get back to you by the next day. Call the Department of Personnel at (609) 292-4144 with questions regarding Civil Service hiring.

January 1997

TO: Certifying Officers, State Colleges and Universites

FROM: William H. Kale, Acting Assistant Director, Client Services

SUBJECT: Chapter 8, P.L. 1996 Information for Employees

Enclosed are two payroll inserts state bi-weekly employees will receive with their January 24, 1997 paychecks. The first enclosure is a letter from Margaret M. McMahon explaining the provisions of Chapter 8, P.L. 1996 as it relates to State-paid health benefit coverage in retirement. The second enclosure is the winter edition of the Health Capsule. The Health Capsule is a newsletter which informs participating employees about developments in their health benefits program. This issue contains informative articles about the provisions of Chapter 8, prescription drug savings through PAID Direct, the new COBRA administrator, changes in the federal COBRA law, and more.

Please feel free to reproduce both inserts for distribution to your employees.

Enclosures

January 1997

TO: State Biweekly Benefits Administrators, State Human Resource Directors

FROM: William H. Kale, Acting Assistant Director, Client Services

SUBJECT: January 24, 1997 Payroll Inserts

Enclosed are two payroll inserts state employees will receive with their January 24, 1997 paychecks. The first, at enclosure 1, is a letter from Margaret M. McMahon explaining the provisions of Chapter 8, P.L. 1996 as it relates to State-paid health benefit coverage in retirement. The second, at enclosure 2, is the winter edition of the Health Capsule. The Health Capsule is a newsletter which informs participating employees about developments in their health benefits program. This issue contains informative articles about the provisions of Chapter 8, prescription drug savings through PAID Direct, the new COBRA administrator, changes in the federal COBRA law, and more.

Enclosures

December 1996

TO: Certifying Officers

FROM: Beneficiary Services

SUBJECT: Waiver of Group Life Insurance Over $50,000

Chapter 62, P.L. 1994 permits members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System and State Police Retirement System to waive their noncontributory group life insurance over $50,000 to avoid a possible tax liability on that benefit. The Internal Revenue Service classifies all life insurance coverage over $50,000 as a fringe benefit subject to taxation. The amount of life insurance is not taxable but rather the premium required to pay for the life insurance coverage is taxable.

In order for you to provide your employees with correct W-2s for 1996, we have enclosed a listing of your employees who have waived their non-contributory group life insurance over $50,000.

If you have any questions about the listing, please contact us at the address above.

December 1996

TO: Certifying Officers, State Colleges and Universities, County Colleges, Office of Student Assistance, Commission on Higher Education

FROM: William H. Kale, Acting Assistant Director, Client Services

SUBJECT: Considerations for Choosing between PERS and ABP Handbook

Enclosed for your use are ten copies of the newly revised 1996 handbook, Considerations for Choosing between PERS and ABP. Adobe PDF (37K)  The 1996 edition includes legislative and administrative changes as of October 1, 1996. The handbook will be a useful tool for your employees eligible to transfer from PERS to ABP when making the important decisions concerning their retirement benefits.

If you wish to order additional copies of the handbook for your employees, you can call the Employer Request for Forms, 24 hours a day, seven days a week at (609) 777-4357. Be sure to include the name of the person to receive the shipment and the physical address of the location receiving the shipment. You can expect delivery within 15 working days.

As always the Division of Pensions and Benefits welcomes your comments and suggestions, so please write to me directly with your comments on the revised handbook.

Last update: June 28, 2010